Category Archives: GDPR

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Brave Pursues Legal Action Against Google for User Privacy Breach

Brave, a first of its kind internet browser powered by blockchain technology, is taking international legal action against Google for systematically breaching user privacy on a large scale. Google’s actions are probably in violation of the European Union’s General Data Protection Regulation (GDPR) law, so Brave’s actions against Google could lead to an investigation and heavy fines from the European Data Protection Board.

Brave has filed complaints against Google in the United Kingdom and Ireland. Johnny Ryan, chief policy officer at Brave, says, “There is a massive and systematic data breach at the heart of the behavioral advertising industry. Despite the two-year lead-in period before the GDPR, adtech companies have failed to comply.”

Allegedly, Google collects personal data about a user and their internet behavior, and broadcasts it to dozens if not hundreds of data firms. Selling personal data is big business for Google, particularly using this data for its Adsense and Adwords products to display ads targeted at specific users. The online ad industry has grown to USD 273 billion this year, with Google being the biggest online ad service.

Research shows that this goes beyond ads. Google supposedly collects data on political ideology, sexuality, and ethnicity, and distributes this to data firms who are willing to pay for it. Essentially, Google is wiretapping the internet usage of the world and selling the data for profit. It has been speculated that this data goes to governments and is used for criminal investigations.

Brave was specifically designed to improve the privacy of internet users, as well as launching a completely new ad model where publishers and users are paid with a cryptocurrency called BAT. This eliminates the middleman in the online ad business. Middlemen such as Google take most of the profits for online ads, leaving only a small fraction for publishers.

Since Brave is actively trying to protect user privacy, it makes sense that it noticed Google’s data collection activities. Google has been compromising the privacy of the Brave browser, defeating its purpose.

If Brave is successful with the legal action, Google could be fined up to 4% of their yearly revenue, which is billions of dollars, and it would lead to a beneficial reduction of data collection by the internet giant and other internet firms. However, Google can afford the most powerful lobbyists and lawyers in the world, and some foresee that any fight against it won’t be easy.

 

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GDPR May Stifle Blockchain Innovation, Finds EU Report

The EU Blockchain Observatory and Forum has released a report warning that the General Data Protection Regulation (GDPR) laws instated by the European Union (EU) earlier this year may prevent effective blockchain innovation taking place.

The Blockchain Innovation in Europe report cites a lack of clarity in the legal framework regarding personal data and blockchain technology as a major issue for entrepreneurs and developers working in the EU. The report states that it “can put a brake on innovation”.

Friction between GDPR and blockchain

One of the crucial issues discussed is the incompatibility with a decentralized blockchain network to erase person data, with GDPR giving citizens the right to have their information erased upon their request. To enforce these right, GDPR requires a central authority to be held accountable, something lacking in the structural nature of a decentralized blockchain network.

Permissionless blockchains can also not be guaranteed to comply with GDPR restrictions that require data to only be transferred to third parties outside of the EU who offer equal data protection regulations.

Thus, applications built on a blockchain are being threatened by unclear laws regulating them.

A need to update GDPR?

The report claims that these conflicts are not addressed because during the time GDPR policies were being constructed, blockchain was not as popular with developers, nor nearly as well known and utilized as it is now. This means that the laws were written with an implicit assumption any database would operate with a centralized authority for processing data.

However, the investigatory review does claim that blockchain could in the future evolve to become key in promoting data sovereignty and the further goals of GDPR. With more research and development, blockchain could theoretically have compliance supported in the code of platforms and applications.

For now though, with hope, the report will influence EU lawmakers to clarify what is required from blockchain developers to prevent the industry from moving out of the union.

 

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Blockchain Compatibility with GDPR’s ‘Right to be Forgotten’

The EU’s new General Data Protection Regulation (GDPR) policies place an emphasis on the ”right to be forgotten”, meaning that at any time an organization should be able to delete users’ personal data at their request. With immutable, decentralized blockchain technology, the question arises as to how blockchain projects will be able to comply with these principles.

Who is in charge of regulating blockchain data?

Indeed, the foundations of trust in blockchain comes from its immutability, something perhaps inherently contradictory to the new GDPR policies. Public blockchain configurations are decentralized, relying on peer-to-peer (p2p) transactions without any control or authorization. This means that anybody participating can be seen as a controller in the eyes of the law because of the copy on their computer.

While private blockchains make it easier to identify the administrator, it is still far different than the classic scheme considered by GDPR that easily identifies a data controller. So, legal responsibilities are transferred to people orbiting around the blockchain, considered as third services, giving them the responsibility to uphold the regulations.

Each blockchain project must be considered on an individual basis to identify the obligations imposed in regards to respecting data subject’s rights. There is yet to be a consensus in the blockchain community, however, how third services can respect and comply with the right to be forgotten.

Exploring immutability solutions: alternative blockchains

Business and innovation blockchain developers BTL judged a hackathon at the Consensus Conference in New York last month, where developers were challenged to build various applications capable of permanently deleting data on the Interbit blockchain platform.

Interbit differs from public blockchains such as Ethereum and Bitcoin, as it has been purpose-built for business enterprises and meeting GDPR’s requirement of the “right to be forgotten”, hence enabling the permanent removal of information.

BTL even believes that the future of data protection lies in blockchain solutions, arguing “we would go as far as to say that you can only truly meet this (GDPR) requirement with … a blockchain solution…Interbit allows data to be segregated across multiple chains within single applications. Delete a chain, (and the) data is gone, for good.”

The separation of data across several private chains both facilitates GDPR compliance and implements total data privacy that lacks on public blockchains. While Interbit is one just solution now, the industry is sure to follow with many more innovations to come.

 

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EU Terrorist Funding Study: Crypto No Greater Threat Than Traditional Currency, Increased Regulations Required

In a study published Monday, the EU parliamentary think tank has concluded that cryptocurrencies present no more of a threat to terrorist financing than fiat currencies, while improved regulations, industry intelligence, and community relationship building offer the strongest policy actions to combat the threat.

The report was commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs, conducted to asses the risks imposed by the rapidly changing, decentralized space of virtual currencies.

Crypto risks no greater than traditional methods

The paper acknowledges that the cryptocurrency space does not represent a more significant threat than the ‘traditional’ forms of terrorist financing. ”In their current form and at current levels of adoption, [virtual currencies] may not present terrorist actors with substantial advantages over other methods of funding and financing they already utilize,” it reads.

In addition to this, the research notes that there are very few publicly-documented, confirmed cases of virtual currencies being used in regards to terrorist funding. With the recently imposed EU GDPR and AML (anti-money laundering) regulations, these risks posed by cryptocurrency usage are only decreased further.

The threat of crypto-funded terrorism

However, the study highlights the borderless, peer-to-peer (p2p) nature of cryptocurrency trading as offering prospective terrorist actors a platform to transfer funds out of the regulated sector, and beyond the purview of counter-terrorist financing authorities. Dependent on the virtual currency being traded, various levels of anonymity and pseudonymity are offered, making it appealing for those looking to conduct illicit activities.

Several incidents are pointed to, demonstrating that both politically and religiously inspired extremist actors have utilized virtual currencies in the past, although in a ”relatively low-volume and unsystematic fashion.” The research suggests that the nature and scale of the threat are difficult to predict, although potential terrorists may be looking to expand the use of cryptocurrencies in their illicit activities.

Potential illegal activities that these actors could utilize are detailed, notably including soliciting donations in crowdfunding campaigns conducted on social media, as well as transmitting funds internationally among members of terrorist networks using P2P value transfers.

Increased regulation required

To target these threats, the study offers a list of EU policy recommendations, including ensuring comprehensive directives are applied. Particularly emphasized is a need to implement regulations that are relevant and adaptable to the rapidly-evolving technologies behind cryptocurrencies in a way that does not stifle their innovation.

A need to address both established cryptocurrencies such as Bitcoin and altcoins differently is noted: ”Regulators should also draft guidance that takes a nuanced approach to characterizing the risks [virtual currencies] pose in different contexts and for different purposes. For example, the illicit finance risks the traceable cryptocurrencies such as Bitcoin present is generally not as significant as that presented by privacy-focused alt-coins.”

Community-driven industry intelligence

Developing law enforcement knowledge and capacity is also focused on as a key point to countering the usage of cryptocurrencies in terrorist financing. Interestingly, the paper places a significance on the positive potential outcomes of reaching out to the established cryptocurrency community in order to better their industry intelligence.

”The public sector cannot develop effective regulation, enhance knowledge and improve intelligence acting alone. Cooperation and interaction with businesses in the VC-industry is essential… Member States should develop dedicated fora for sharing information with local VC industry participants, including sharing of intelligence for operational purposes,” the research notes.

A lack of industry intelligence has been the source of many issues relating to implementing cryptocurrency and blockchain regulations, so an approach such as this suggested may well prove invaluable in assisting authorities to make better-informed decisions.

Reaching out to the cryptocurrency community for their support rather than marginalize their innovations would be hugely beneficial, alongside helping improve what many see as an undeserved bad reputation when it comes to cryptocurrencies and criminal activities.

 

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Over $1 Billion Crypto Stolen Worldwide in Last 18 Months as GDPR Activates

The Anti-Phishing Working Group (APWG) estimate that over $1 billion (US) in crypto has been stolen since the start of 2017, states Blockchain Security Company — CipherTrace. This recent surge has led to numerous global investigations, aiming to bring the criminals resposible to justice.

According to CityWire, the UK’s Financial Conduct Authority is reported to have opened 24 investigations into cryptocurrency businesses. The investigations, some of which are the result of several whistleblower reports focus on regulatory compliance, states CoinTelegraph while citing the responses to Freedom of Information requests

The FCA has not mentioned names but claims that the investigations have been initiated into the companies in order to, “determine whether they might be carrying on regulated activities that require FCA authorization”

The cleanup is not unusual. Globally, regulators have been particularly active over past months with a focus on user protection, as the FCA point out, with investigations largely identifying “risk to consumers.”

The US-Canada “Operation Cryptosweep” is another such investigation underway, as reported recently by BitcoinNews. The focus of the North American operation is to target fraudulent investment programs, which to date has revealed 35 activities, the North American Securities Administrators Association (NASAA) announced.

In Singapore, the Central Bank has issued warnings to eight exchanges regarding securities law infringements and has halted the activities of one ICO token issuer.

Blockchain security company Cipher Trace suggests that the EU’s new General Data Protection Regulation (GDPR), which has now been activated, could reduce cybercrime. Cipher Trace claims that the new regulations could support these types of investigations due to critical ICANN WHOIS information.

Internet WHOIS data is a new resource for investigators comprising the Internet’s database of record, containing the names, addresses and email addresses of those who register domain names for websites on the Internet. Cipher Trace suggests that this data will become a crucial factor in recovering stolen funds and identifying criminals for eventual prosecution.

WHOIS is a fundamental resource for investigators and law enforcement officials who work to prevent these thefts. The Internet’s database of record is crucial in performing investigations that allow for the recovery of stolen funds, identifying the persons involved, and providing vital information for law enforcement to arrest and prosecute these criminals.

In the last year, $700M has been reported stolen by cybercriminals, and hundreds of millions of more thefts go largely unreported, according to the blockchain security company,

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Europe: Crypto and Blockchain News Roundup, 18th to 24th May 2018

Europe

Welcome to our weekly roundup of all important blockchain and cryptocurrency news from around the world. Follow the latest developments in the cryptocurrency space continent by continent, country by country.

European Union

EU privacy laws shut down PICOPs amid radical changes adopted by other companies: The new stringent Global Data Protection Regulation (GDPR) by the EU is causing problems to many blockchain startups operating in the 28-member economic union with the Parity ICO Passport Services (PICOPS) startup shut down following its failure to comply with the new rules. GDPR’s right to delete data was cited as the breaking point for PICOPS as the conflict arose with blockchain’s immutability.

PICOPS in a statement said: “Because of this, the significant resources required to make PICOPS GDPR-compliant, and the fact that PICOPS is not part of our core technology stack, we have decided to discontinue the service despite overwhelming market needs and demand.”

Other blockchain companies are also rapidly making changes to their platform with LocalBitcoins’s latest changes in terms of services to come into effect after 25 May 2018.

Small business focus by EU blockchain committee: EU parliament members voted to recommend blockchain payment systems to small businesses throughout the continent, according to Coindesk.

While the committee fell short of recommending cryptocurrencies, it did suggest non-monetary uses including specifying data controls, and supply chain management, that will make small businesses operations cost-effective.

Eva Kaili, a committee member said: “Today the Industry Committee voted univocally in favor of a forward-looking technology that we expect to change the quality of our life, empower SMEs and improve business models in most industrial sectors… and we aspire to make EU the global leader in the era of the Fourth Industrial Revolution.”

England

London mosque starts accepting ETH donations: A London mosque belonging to Turkish Cypriot Muslims have announced the acceptance of donations in ETH, according to London’s Hackney Gazette. The leaders made the decision to accept cryptocurrency for Zakat, a mandatory part of Muslim faith that requires 2.5% of followers’ wealth to be donated to charity.

The mosque is expecting more than EUR 10,000 in donations throughout the current Ramazan month.

Cryptoassets task force makes positive start: The UK government’s task force on cryptocurrencies met for the very first time on 21 May as part of the country’s efforts to regulate cryptocurrencies. The task force includes members from the national bank, financial watchdog Financial Conduct Authority (FCA) and UK Treasury.

The task force’s overall initial attitude seems tolerant as the members acknowledged the use of cryptocurrencies and their utility while at the same time focusing on the issues they bring. UK is currently a sizeable force in the blockchain community.

Spain

Government opens legal doors for crypto investment: The Spanish National Securities Market Commission or Comisión Nacional del Mercado de Valores (CNMV) has recently announced that investment funds could now invest and trade in Bitcoin in the country. The move opens more Blockchain companies to move to Spain and the statement was within the Q&A document for fintech companies previously and the CNMV said:

“This type of funds would have a legal place in Law 22/2014, which regulates, in addition to venture capital entities, other collective investment entities of closed type and their management entities.”

But, the CNMV will have to comply with European standards and since there are none, the investment companies can have a benefit in the country as they will have legal cover.

Poland

Government suspends crypto tax collection following popular demand: The Polish government has softened its stance on cryptocurrencies by suspending tax collection on cryptocurrencies, according to Cointelegraph.

The Eastern European nation had just recently heavily taxed the cryptocurrency earnings in the country but following public outcry, the government was forced to make changes to the cryptocurrency regulation.

Switzerland

Switzerland ranked as most crypto-friendly European nation: Switzerland has once again come on top of the rankings in the most crypto-friendly countries in Europe, according to a recent study based on Europe. Gibraltar and Malta also ranked favorably.

A total of 48 European countries and territories were examined in the study for the regulations in place for ICOs, cryptocurrencies as payment services and crypto taxation approach. Switzerland came out on top in all countries. Gibraltar came in second followed by Malta.

Government mulling over e-Franc crypto: Swiss government is following up on its pro-blockchain status by considering the establishment of a cryptocurrency named e-franc, according to a report by the Reuters. A study has been requested by the government and the currency will just use blockchain technology for transparency and record-keeping.

Norway

Norway joins central bank queue on crypto: The Norwegian government is looking to launch its own state cryptocurrency, according to latest reports by CoinTelegraph. An official document has been released by the government and shows that the Norwegian government is keeping up with the current trends of central banks looking into state-backed national cryptocurrencies.

 

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Parker-Fitzgerald, UK Finance Report Sheds Light on Institutional Attitudes and Approaches to Blockchain

Banks have been flocking to disruptive technologies such as Artificial Intelligence (AI), cloud technologies as well as blockchain technologies. A recent joint report from UK Finance and Parker Fitzgerald warns of the “systemic risks” attributed to the three technological innovations.

New challenges

More specifically, the three-part report goes on to identify the risks attributed with distributed ledger technology (DLT) and blockchain technology. For starters, the paper makes a note of the growing scale of “experimentation and potential adoption” within the industry; it holds the belief that blockchain technologies will require “industry scrutiny,” which is because of issues regarding privacy, scalability, security, and competition.

The paper argues that while the technologies will benefit banks as they can move away from their archaic, inefficient legacy systems, they still carry new risks. For instance, the report harbors concerns with privacy as blockchain anonymizes data such as the keys or certificates of each transaction.

This causes trouble for smaller financial institutions as the transactions will be easier to identify within a smaller network and gives them right to be “understandably concerned” running a network that allows for even their competitors to see the anonymized transaction records.

New solutions

However, it also goes on to state that “technological solutions are possible”; the implementation of ‘cross-chains could address the concerns surrounding privacy by “allowing each participant to maintain a separate bilateral chain with all other participants. To increase security and address privacy others have suggested the potential of storing data ‘off-chain’”.

Though it continues to admit that this could reduce the benefits of using the technology as using cross-chains slows “the clearing of transactions” and in the instance side-chains are used, “reducing the ability to test and confirm the veracity of information on the ledger”.

Some conclusions are made and are generally rather optimistic, acknowledging that despite challenges ahead, embracing the emerging technologies carries far-reaching benefits and will catalyze the enablement of efficiencies and new economies as detailed in the report.

Timing is everything, Poland, and the GDPR

Furthermore, the paper was published a week after Poland became the first country to move banking records on a gigantic scale onto blockchain and recently, “temporarily” suspended tax collection for digital currencies.

It also comes just days before the new EU General Data Protection Law (GDPR) guidelines around data protection were released; the legislation which has been in the works for some years is to be implemented on 25 May 2018 in all EU member states.

In the build-up to the legislation, there had been some knee-jerk responses, fear, and uncertainty, though it is argued that blockchain technology can be used to authenticate user identity as opposed to storing it, which can be a helping hand in meeting the new GDPR provisions.

It appears as though the global conversation surrounding blockchain technology is reaching a pivotal moment, one in which the global community acknowledges the validity of the tech and works hard to ensure it can be safely, securely and effectively utilized.

 

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New EU Privacy Laws Brings Parity’s PICOPs to a Halt

New General Data Protection Law (GDPR) guidelines have led to the shutdown of the Parity ICO Passport Service (PICOPS). The main conflict is between blockchain’s immutability and GDPR’s right to deletion of data clause.

With fines getting as severe as EUR 20 million, it has prompted other cryptocurrency companies to clean up their act as well. Trading platform LocalBitcoins recently made changes to their terms of services, which will come into effect on 25 May.

The service will cease to exist from 24 May due to these interpretations. Since PRICOPs allowed anyone to assign an Ethereum address to a unique identity, one could see how it involved personal data.

IF PICOPS was adjusted to make the service GDPR compliant, PICOPS would only be able to offer a “very limited set of features”. The amount of resources required to make the service GDPR compliant simply would not be worth the features PICOPS would be able to offer.

“Because of this, the significant resources required to make PICOPS GDPR-compliant, and the fact that PICOPS is not part of our core technology stack, we have decided to discontinue the service despite overwhelming market needs and demand,” said Parity.

Parity’s shutdown of PICOPS comes after a busy year for the Ethereum client, assisting in many ICOs and token sales in 2017. Parity was also in headlines for two hacks, resulting in over USD 300 million in ETH gone.

What effect this has on the ICO market going forward is still unknown. Ethereum has become the de-facto standard for issuing tokens due to its smart contract capabilities, but with PICOPS gone, this gives other platforms a shot.

Despite the shutdown of PICOPS, Parity is working with regulators to inform them on what potential effects laws may have on the industry.

 

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Regulations, Hacking Push Blockchain Provider To The Wall

Ethereum wallet and blockchain provider Parity has been forced to shut down its PICOPS platform from 24 May following new EU data protection rules and guidelines.

The EU General Data Protection Regulation (GDPR) replaces the Data Protection Directive 95/46/EC and was designed to harmonize data privacy laws across Europe, to protect and empower all EU citizens data privacy and to reshape the way organizations across the region approach data privacy,” states the EU’s GDPR portal.

However, according to MSN, the new law is causing certain problems, with LocalBitcoins disabling multiple accounts due to the new rulings. The GDPR laws are demanding, with a significant checklist of requirements, including those that relate to data processing principles and the limitation of storage. The significant challenges to blockchain mainly concern the immutability of transactions, replication, and encryption, including data processors and data controllers.

Swiss law firm PwC Legal recommends that platforms now scrutinize their blockchain-based solutions with regard to GDPR compliance to obtain a clear view of the legal risks they may encounter. It also explains why blockchain’s most significant feature; immutability, could be undermined by the new EU ruling:

“Transactions on a blockchain are immutable. It is not possible to delete information from a blockchain. This may contradict the GDPR’s right to erase / duty to delete personal data when a lawful ground for processing ceases to exist.”

Ethereum co-founder Vitalik Buterin commented on the news, calling it a sad development, particularly as PICOPS had facilitated many ICOs on the Ethereum ecosystem. Commenting on Twitter, he said, “A potentially very useful service in the Ethereum ecosystem discontinued due to GDPR issues.”

Jackson Palmer, the creator of Dogecoin, also criticized GDPR laws, despite saying that he thought it was “a step in the right direction from a data privacy perspective”.

“While I greatly respect the movement towards better data privacy and security laws, GDPR compliance is a large and unrealistic burden that small side-projects are simply under-equipped to manage (especially if being maintained by a single developer in their spare time),” commented Palmer.

Jutta Steiner, the CEO of Parity was critical of GDPR, arguing: “From a practitioner’s perspective, it sounds to me that it was drafted by trying to implement a certain perspective of how the world should be without taking into account how technology actually works.”

However, the company has commented that it will continue to work with regulators in order to ensure that the new rules don’t impact negatively on the industry. These are hard times for Parity, following its hacking last year, losing more than USD 300 millions worth of Ether.

 

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